The most-bought guru stocks each quarter are invariably also sold by other gurus, revealing at least a minority difference of opinion about even the most popular stocks.
The Consensus Picks of Gurus screener reveals the U.S. stocks that a considerable number of gurus bought but none sold during the quarter, indicating more agreement about the company and the timing of the purchase.
Setting the screener to search for companies at least five gurus bought and zero sold during the past three months produces only 11 stocks out of the more than 7,000 traded in the U.S. Some of the companies appear in several hundred guru companies while others only in dozens. Some have large combined weightings in guru portfolios and some have less than 2%. Price-earning ratios and dividend yields also vary.
The most bought of these stocks were: RSP Permian Inc. (RSPP, Financial), L-3 Communications Holdings Inc. (LLL, Financial), Bunge Ltd. (BG, Financial) and Radian Group Inc. (RDN, Financial).
RSP Permian Inc. (RSPP, Financial)
Eight gurus bought RSP Permian Inc. during the first quarter and none sold. Boone Pickens, the energy investor, increased his position to 4% of assets while investing house Barrow, Hanley, Mewhinney & Strauss took the largest new stake at 2% of outstanding shares.
RSP Permian is a Dallas-based independent oil exploration and production company with a $3.66 billion market cap that drills vertical and horizontal wells in the Permian Basin of Texas.
In the harsh but improving pricing environment of the first quarter, Permian increased its average daily production rate by 54% over the prior year quarter but decreased slightly from the fourth quarter. It also decreased cash operating costs per barrel by 44%, acquired $29.1 million of interests in drilling properties and completed 25 new horizontal wells and three vertical wells.
The increase in production helped offset oil prices, which slipped even further during the quarter. Revenues across its production segments increased except for natural gas liquids. Total revenues surged 9% to $55.8 billion over $51.4 billion in the prior year quarter. For the same periods, the average realized oil price per barrel dropped to $30.35 from $43.88.
The company also took advantage of low prices to hone its drilling process to help lower well costs. It expects to increase drilling in the second half of 2016 if oil prices continue to rise.
RSP Permian ended the quarter with $686.9 million in long-term debt and $73.6 million in cash on its balance sheet.
The stock is close to a three-year high after trading up 46% year to date, to $35.62 per share, with a price-sales ratio also close to a one-year high at 10.3.
L-3 Communications Holdings Inc. (LLL, Financial)
Seven gurus bought shares of L-3 Communications in the first quarter.
Steven Cohen (Trades, Portfolio) has the largest percentage of outstanding shares and the largest portfolio weighting of the company, and he increased his position by 989% from last quarter.
L-3 is a provider of communication and electronic systems used in the aerospace industry by the military and commercially. It has a $34 billion market cap and its stock price rose 23% year to date to close at $146.91 per share Wednesday, a 10-year high.
For the past five years, L-3 has had a general down trend in its financials. Its five year annual decline rates were 1.2% for revenue, 10.5% for EBITDA, 14.4% for operating income, 1.2% for free cash flow and 5% for book value.
In the first quarter, operational efficiencies, favorable contract performance and the sale of a lower-margin business drove the company’s operating margin to 10.7% as it attempts to “transform L-3 into a stronger, more efficient company and enhance margins,” it said in the earnings release. The operating margin compares to 7.5% for the first quarter the prior year.
L-3’s revenue declined 5% compared with last year to $2.5 billion as sales to the U.S. government strengthened 4% and international and commercial client sales weakened 14%. The company has generated free cash flow for the past decade though it has been in decline for the past five years.
The company also has a price-book ratio of 2.5 and price-sales ratio of 1.1, both near their 10-year highs.
Seven gurus also bought Bunge Ltd. Robert Bruce (Trades, Portfolio) has the most of his fund allocated to the position at 1.8%. Hotchkis & Wiley own 1.2% of shares outstanding for the biggest position.
Bunge is an agribusiness and food company with a variety of segments and $9.3 billion market cap. The stock fell 2.6% year to date and closed at $66.50 per share.
In the first quarter, Bunge’s net sales declined to $8.9 billion compared to $10.8 billion for the prior year quarter. Net income per share also declined to $1.54 from $1.67. For the year, the company expects growth in its agribusiness, food & ingredients, fertilizer and sugar & bioenergy.
The company has $3.9 billion in debt after ending 2015 with $2.9 billion. Its cash balance increased to $523 billion from $411 million at year-end. Bunge has generated free cash flow in five of the past 10 years.
The stock trades with a price-earnings ratio of 13.8, price-book ratio of 1.5 and price-sales ratio of 0.24.
Radian Group Inc. (RDN, Financial)
Seven gurus also bought Radian Group Inc. while no one sold. Lee Ainslie (Trades, Portfolio), with the largest position, owns 7.78% of shares and has the greatest amount of his assets invested at 3.27%.
The $2.52 billion market-cap company’s shares fell 12% year to date, closing at $11.80. Radian is a mortgage insurance and risk management company with several separate companies.
In the first quarter, Radian Group benefitted from solid credit trends. Revenues, which has been in decline over the past five years, increased 8% year over year to $313 million. Book value increased 8% to $12.42, and net income fell 28% to $66.2 million partially due to a loss on induced conversions and extinguishing debt. The company also repurchased $381 million worth of shares.
Radian Group has a price-earnings ratio of 10.65, price-book ratio of 0.95 and P/S ratio of 2.38.
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